Nintendo's Big Mobile Move May Upset a Lot of You

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Nintendo's Big Mobile Move May Upset a Lot of You

Gaming pundits' favorite hobbyhorse is dead: After years of pleading by investors, analysts, and reporters to put its games on smartphones and tablets, Nintendo announced just such a plan Tuesday.

And, perhaps to make up for years of intransigence on the matter, Nintendo is not taking a tentative half-step into mobile, but rather establishing a long-term alliance with DeNA, one of the major new Japanese powerhouses to emerge from the mobile revolution. In fact, as it said during its announcement, Nintendo is now the number-two shareholder in DeNA.

Chris Kohler

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Chris Kohler is the editor of Game|Life.

Nintendo's stock price exploded, of course. The announcement also brought a great deal of football-spiking from analysts and reporters, particularly those who've argued that all of Nintendo's problems could be boiled down to one succinct, easily-solved issue, and that doing so would have no negative impact on the quality of Nintendo's games.

It would be awesome if that turned out to be the case. But it's hardly guaranteed. Nintendo going mobile is the beginning of a new era, but you may not like everything that happens. Here's why.

Nintendo is still bucking conventional wisdom, and it's still right to do so. Nintendo may be "going mobile" in the sense that it will be producing games starring its characters for these platforms, but company president Satoru Iwata was quick to note that it is not capitulating to the advice that it simply dump classic games onto iPhones, hacking a touch interface into the 8-bit Super Mario Bros., for example.

Iwata rightly points out that the experience would be a mismatching of software and hardware that would not produce a game that meets Nintendo's standards. In other words, we'd have Nintendo characters on iPhone, but not Nintendo-quality experiences. Dropping old games onto phones would be a short-term income-boosting plan: Okay, you put Zelda on Android and made a few million dollars, but how do you follow that up?

Nintendo is making it clear that by partnering with DeNA it is looking to build a sustainable business segment. On that note, today's announcement should put the lie to the idea that it would have been simple for Nintendo to "go mobile;" it is a whole different world requiring different know-how and skill sets, and Nintendo wouldn't be buying 10 percent of DeNA today were that not the case.

But it's been a rough two years for Nintendo. The Wii U already had launched to tepid response by the time that Iwata said that, and sales have only mildly improved even after Nintendo supplied it with well-reviewed entries in every major game franchise in its stable. The portable 3DS has fared better, but sales are still on the decline.

In other words, it's looking less and less likely that there is a savior waiting in the wings, some grand plan to juice the popularity of Nintendo's platforms. The company is preparing for a future in which this is the new normal.

Nintendo has been preparing for this, game-design-wise, for a while. Nintendo has not been unmoved by the incredible monetary success and mindshare gains made by free-to-play smartphone games in Japan and around the world. Over the past year, we've seen it begin embracing the free-to-play model and experiment with different ways of implementing it across games on its 3DS platform.

We should not expect Nintendo's mobile phone games to be anything but the predominant free-to-play model—and not something like Rusty's Real Deal Baseball in which the lifetime value of any user maxes out at about 40 dollars.

No. Nintendo's going fishing for whales.

This announcement was so big that Nintendo had to announce a new console, too. Nintendo has been murmuring about its plans for its next entry in the console market for a while, mostly to point out what it did wrong with Wii U and 3DS: The portable and home console should have shared an architecture, like iPhone and iPad, Iwata has said, noting that the next generation of Nintendo products would do something similar.

Yesterday, he made those next-generation plans a little more concrete, saying Nintendo would discuss a "brand-new concept" for a dedicated gaming device called the "Nintendo NX" in 2016. Iwata said that he wanted to fold the announcement of the Nintendo NX in with the DeNA news to avoid giving the impression that Nintendo was bailing out of the console space.

This is a catastrophic change that will have major, unknowable effects for the rest of Nintendo's lifespan. Nintendo believes the games made with DeNA will boost demand for its platforms by exposing more consumers to Nintendo games and driving them to buy Nintendo hardware, Iwata said.

"By taking this approach, we firmly believe that doing business on smart devices will not shrink our dedicated video game system business and will instead create new demand," he said.

This certainly would be the best-case scenario, and I could certainly tell you a story in which this precise thing happens: Someone downloads Kirby's Candy Chomper Payola Blitz on iOS, falls in love with the character, sees an interstitial ad for Kirby's DLC-Free $40 Throwdown on the Nintendo NX, and buys it (within the app, since Nintendo has in this fantasy scenario established a unified account system that links all of its digital businesses).

But I also could tell you an equally compelling story about a player who downloads the free mobile Kirby and stops there. Even if she plays it every day for a year, she's probably in the 98 percent or so of players who never spend a dime on free-to-play games, and are subsidized by the profligate spending habits of the other 2 percent. Do they open their wallets for a premium Kirby experience and a Nintendo NX to go with it? Or did Nintendo, as it feared, cannibalize its audience?

This is not to say Nintendo does not stand to make more money even if it does have a deleterious effect on its console business. But if you love Nintendo's console games as they exist today, you may have some cause for concern. If the money starts flowing in from mobile, does it make sense that Nintendo would invest it in lower-margin, higher-risk premium console games? Or would it simply realize that it needs to re-invest in creating ever more sophisticated mobile games?

That is what I meant when I said a year ago that you do not get a little bit pregnant. Nintendo is not going to make a huge movement into a fast-growing, financially lucrative segment of the gaming market and then slow-roll it. If mobile turns out to be driving huge profits, it starts to wag the dog. Eventually, from the perspective of some investors or analysts, any slightly underperforming console game is a missed opportunity that should have been mobile.

How long until mobile consumers start demanding not Pokemon Shuffle, but full-on Pokemon role-playing games? From some of the responses that I'm seeing on my Facebook wall, that seems to be exactly what many players are expecting will come out of this move.

In other words, we'll start to hear "Well, it's nice, but why isn't it on my phone?" more often. And as that shift keeps happening, consumers might start finding fewer reasons to buy Nintendo hardware. What that means for Nintendo's games is anyone's guess.